Editor's note: This popular story from the Daily Briefing's archives was republished on Nov. 22, 2019.
Read Advisory Board's take: Four questions to ask when evaluating partnership opportunities
Small community hospitals increasingly are joining forces with larger health systems to give patients access to more specialized care, but experts say it's important to fully evaluate these agreements—as a big name doesn't automatically mean better quality, Sandra Boodman reports for Kaiser Health News.
A growing trend that can help patients
A number of well-known hospitals—such as Mayo Clinic, Cleveland Clinic, and MD Anderson Cancer Center—have signed affiliation agreements with smaller community hospitals and facilities throughout the country, Boodman reports.
The agreements give community hospitals access to experts and specialized services at the large hospitals.
Bryan Mills, CEO of Community Health Network, which partners with MD Anderson, said his hospital's partnership "is really not about a competitive advantage … but about providing optimal care." He added, "100% of the work we do is audited by MD Anderson. We can get second opinions almost instantly."
For example, Anuj Agarwala, an oncologist with Community Health Network, said MD Anderson's team recently served as a second opinion in a case in which a woman, 35-weeks pregnant, was diagnosed with inflammatory breast cancer. The patient was very concerned about the safety of her unborn child, Agarwala said and the MD Anderson team was able to reassure both his patient and him that they were using the best treatment plan.
Smaller hospitals' reputations also can benefit from attaching themselves to a larger brand, Boodman reports. Gerard Anderson, a professor of health policy and management at the Johns Hopkins Bloomberg School of Public Health, said affiliation agreements are "essentially benefit by association. In some cases, it's purely branding and in other cases it's a deep association."
Large hospitals stand to benefit from the partnerships, too, Boodman reports. They gain new sources of patients for clinical trials and specialized services while also increasing their brand name recognition without actually having to establish a physical presence in the community, Boodman writes.
Partnerships come in all shapes, sizes
Ben Umansky, managing director for research at Advisory Board, said, "Every one of these models is different."
For example, in some cases, hospitals may choose to fully acquire a smaller hospital, Boodman reports. Johns Hopkins, located in Baltimore, took that approach when it bought Sibley Memorial in Washington, D.C., and Suburban hospitals in the D.C.-area, as well as All Children's Hospital in Florida.
Meanwhile, Memorial Sloan Kettering Cancer Center used a hybrid approach, Boodman reports, noting that the Cancer Center operates a series of facilities around Manhattan and has developed partnerships with hospitals in Connecticut, Pennsylvania, and Florida.
According to Michael Kupferman, SVP of the MD Anderson Cancer Network, MD Anderson seeks to "elevate the quality of cancer care" by forming partnerships with "high-quality [hospitals] to keep patients at home and provide the imprimatur of MD Anderson."
How to evaluate a hospital
Since hospital partnerships vary so significantly, Anderson, said it's important to ask "how often does the community hospital interact with the flagship hospital?" He added, "If it's once a week, that's one thing. If it's almost never, that's another."
Leah Binder, president and CEO of the Leapfrog Group, advises that patients not assume that a brand name is a quality guarantee. "Brand names don't always signify the highest quality of care," she said. "And hospitals are really complicated places."
Binder said patients should check hospital ratings from a variety of sources and not just rely on a brand name's reputation. "In theory, [partnerships] can be very helpful," she said. "The problem is that theory and reality don't always come together in health care" (Boodman, Kaiser Health News, 1/29).
Advisory Board's take
Andrea Martin, Senior Consultant, Health Care Advisory Board
Community hospitals are under increasing margin pressure. Declining revenue from reimbursement cuts coupled with significant cost growth is threatening viability, and prompting hospital leaders to seek new methods to gain financial stability. While some organizations are pursuing mergers and acquisitions (M&A), many independent community hospitals are increasingly turning to non-M&A partnerships to further their strategic goals.
Virginia Hospital Center participating in the Mayo Clinic Care Network is a great example of what can be achieved through these partnerships. Patients at Virginia Hospital Center have access to specialists without the hospital needing to recruit additional physicians—allowing the hospital to better compete with the robust service offerings of the large health systems in their market.
“Community hospital partnerships are not guaranteed to bring value to the hospital.”
According to our research, the most common type of affiliation between community hospitals and academic medical centers is partnerships centered on individual service lines. Through these agreements, physicians travel to a community hospital to provide patients access to specialty care, while the community hospital agrees to refer patients to the academic medical center for tertiary care. In theory, this type of partnership is a win-win for both organizations. However, our research has discovered that, for these partnerships to be successful, leaders must navigate and solve for many operational disconnects, cultural differences, and behind-the-scenes politics that often arise.
As such, community hospital partnerships are not guaranteed to bring value to the hospital. Rather, their success greatly varies on a case-by-case basis. So how can hospital leaders best evaluate partnership opportunities? Our Health Care Advisory Board team suggests beginning with the following four-part framework. While extensive due diligence beyond the scope of this list will be necessary, this framework will be invaluable in rapidly identifying partnership opportunities and avoiding reactive deal-making.
Ask these questions:
- What strategic aims is your partnership intended to support?
- What are the specific elements of integration that must be in place for your partnership to achieve these aims?
- What other organizations are the most attractive partners given your goals and the required elements of integration?
- Which legal structure offers the most appropriate environment for pursuing meaningful integration?
To learn more about this framework and the potential benefits—and downsides—of many partnership models, be sure to download our Strategic Thinker's Guide to Partnerships and Affiliations.
Want other resources aimed at community hospital executives? Make sure to look at our Community Hospital Compendium, where we've rounded up our top resources aimed at addressing the unique challenges that community hospitals face.